State-run Indraprastha Gas (IGL) on Wednesday reported a 11 per cent y-o-y decline in its consolidated net profit at ₹334 crore for the third quarter in FY23.

However, its consolidated total income rose 68 per cent y-o-y to ₹4,145 crore. On a sequential basis, IGL’s net profit fell by a steeper 22 per cent, while total income was higher by 4 per cent.

Total expenses were also higher at ₹3,756 crore (₹2,055 crore). IGL registered an overall sales volume growth of 6 per cent, with the average daily sale going up from 7.66 mscmd to 8.12 mscmd.

Product wise, CNG recorded sales volume growth of 8 per cent y-o-y, while PNG recorded growth of 1 per cent. Total gross sales value moved to ₹4,072.93 crore (₹2,428.06 crore).

The Board has also approved payment of interim dividend of ₹3 per share.

Margin impact

ICICI Securities said sales volume was up 6 per cent y-o-y and flattish q-o-q. The CNG segment grew 7.8 per cent y-o-y and was flattish q-o-q to 6.07 mscmd. The piped natural gas (PNG) volume increased 1.2 per cent y-o-y and 2.4 per cent q-o-q to 2.05 mscmd. Within the PNG segment, domestic PNG volume was up 13 per cent y-o-y while industrial/ commercial PNG volume fell 4 per cent y-o-y, it added.

IGL’s gross margins declined 4.5 per cent y-o-y and 11 per cent q-o-q to 11.1 per scm as higher realisation was offset by rise in gas sourcing costs, the brokerage pointed out.

“IGL increased CNG and domestic PNG prices in Q3 on account of the revision in domestic gas prices October 1, 2022, onwards. However, these price hikes were not sufficient enough to pass on the increase in gas costs which impacted their margins,” ICICI securities said.

Better times ahead

Going forward, the Kirit Parikh committee has suggested a price band of $4-6.5 per mbtu for administered price mechanism (APM) gas. Spot LNG prices have softened to around $26 per mbtu in Q4 quarter to date (QTD) from elevated levels of around $31 per mbtu seen in Q3 and decline in crude prices is likely to bring down the long term gas prices too.

“All these developments would reduce the sourcing cost for CGDs and improve their margins and also likely bring down CNG and PNG prices. Volume growth coupled with steady margins will be key monitorable in the near term,” it added.